In ruling that the services which the BBC provided to the Open University (OU) over a period of more than 16 years were exempt from VAT, a tax tribunal has proclaimed the broadcaster’s independence from government and its public educational value.
Between 1978 and 1994, the BBC charged more than £20 million in VAT to the OU in respect of its production and broadcasting services. However, in 2013, the First-tier Tribunal ruled that VAT had throughout been charged in error and opened the way for the OU to reclaim the sums it had paid, plus interest.
In considering HM Revenue and Customs’ appeal against that decision, the Upper Tribunal (UT) found that, notwithstanding its reliance on the TV licence fee and the appointment of its governors by the Crown, the BBC could not be viewed as either controlled by the government or a body governed by public law.
However, it found that the BBC’s long-standing cooperation with the OU and the scale and variety of its distance learning programmes in general meant that its activities came within the educational exemption from VAT contained within the Sixth VAT Directive (77/388/EEC), which came into force in January 1978.